Contact: Allan Chen, (510) 486-4210, [email protected]
Mark Levine heads the China Energy Group at the U.S. Department of Energy’s Lawrence Berkeley National Laboratory, which he created in 1988 to collaborate with Chinese organizations in furthering energy-efficiency policy in China.
Earlier this year Levine testified on “China’s energy policies and their environmental impacts” before the U.S.-China Economic and Security Review Commission, created by Congress to recommend legislative and administrative policy toward China. In this interview with Allan Chen, Levine discusses his testimony.
As someone who has worked closely with Chinese officials for two decades, providing technical advice on energy efficiency policy, you have a unique knowledge of China’s concerns, and you have ideas on how both nations might be able to overcome their differences and work together. Why should China and the United States work together to reduce greenhouse gas emissions?
Levine: China and the United States account for nearly 40 percent of current global energy-related CO2 emissions. They have the largest potential to reduce emissions growth and need to work cooperatively to establish a global regime in which these emissions are contained.
There is a critical need for assistance from outside, for China to successfully limit these emissions. Without assistance in reducing greenhouse gas emissions, China could triple or even quadruple emissions over the next 20 to 25 years. With serious assistance from industrialized countries the increase in emissions could be cut in half.
There are misunderstandings in both China and the United States surrounding this topic that cause both countries to miss opportunities for fruitful collaboration.
What are the emissions of greenhouse gas from these countries now?
Levine: The United States is responsible for 28 percent and China for 8.5 percent of total cumulative emissions of CO2 from energy consumption. Not well known is the success that China had in limiting emissions earlier in its history. From 1980 to 2000, China limited the growth rate of energy demand and concomitant CO2 emissions to less than half that of its GDP [gross domestic product].
But from 2001 to 2006, China’s energy demand and energy-related CO2 emissions grew faster than the 10-percent annual growth of GDP. This led to an increase in China’s emissions from 12.7 percent of global emissions (2001) to 18.4 percent (2006). In 2006, China instituted a national program to reduce energy intensity – energy demand per unit of GDP – by 20 percent by 2010. The program started slowly but is now approaching its annual target.
China and the United States are the two countries that can have the greatest worldwide impact on CO2 emissions. China is projected to account for more than 40 to 50 percent of new energy-related CO2 emissions globally between the present and 2030 – by far the largest future contributor to increased concentrations of CO2 in the atmosphere.
Meanwhile, the United States has tremendous potential to reduce energy-related greenhouse gas emissions, for two reasons. First, the U.S. per-capita intensity of these emissions is considerably higher than those of other large industrial countries – 2.5 times that of the European Union and 2.1 times that of Japan. Second, the United States has the scientific, technical, and economic capability of developing viable alternatives to fossil energy technologies and is likely to be the world leader in any breakthrough technology, if one is developed.
It is not enough that China and the United States both take steps to reduce CO2 emissions. It is essential that the two countries do this cooperatively. As long as China does little to reduce growth of greenhouse gas emissions, or appears to be doing little, it will be politically difficult for the United States to sign a binding international treaty that commits to a serious cap on emissions. And as long as the United States either does little or appears to be doing little, it’s impossible to imagine China committing to any international treaty that limits its own emissions. This is a vicious circle. Neither country will act boldly unless the other acts first, and neither appears willing to act first.
International negotiations aimed at agreeing to greenhouse gas emissions limits on a country by country basis have had limited success, in part because of differences of opinion between industrial and developing nations. What has been the United States’ point of view?
Levine: Many in the United States look at China’s emissions, note how rapidly they have grown in the past five years, and are aware of the forecasts showing that a large proportion of the world’s expected increase in energy-related carbon-dioxide emissions will come from China. For those who are concerned about global climate change and its possible serious and adverse impacts, emissions from China are a cause of grave concern.
Many Americans express the concern that emissions reductions applied to our country could increase the cost of producing goods and services, thus placing us at a competitive disadvantage with any country that does not do the same. As a result, there are strong sentiments in many quarters in the United States that we should not agree to a cap on our emissions if China does not do the same, especially in light of China’s large trade surplus with the United States.
What is China’s perspective?
Levine: The view from China is very different. The Chinese note that per-capita income, energy consumption, and CO2 emissions are much lower in China than in the United States. They emphasize the disproportionate contribution of the United States to the global greenhouse-gas problem, pointing out that the United States, with a population one-quarter the size of China’s, is responsible for putting far more CO2 in the atmosphere than has China. This point is made to indicate the inequity inherent in focusing on current emissions, while the problem is caused by emissions over long periods of time.
These views provide a philosophical underpinning that supports China’s major concern, looking forward. It is, however, the practical concern that is in the forefront for China. China believes that it will need more energy for development – much more. Chinese officials observe that the industrialized countries have already been through the energy-intensive phase of their development, but China is in the midst of its own. The possibility of gaining a competitive trade advantage through a new climate treaty is much less significant to the Chinese than the possible roadblocks to achieving social development goals that could be brought by a commitment to binding targets.
What does this mean for negotiating an agreement?
Levine: There are the two major impediments to agreement: the Chinese view that a binding commitment on CO2 emissions could stifle their development, and the U.S. view that because of its large trade deficit with China, any adoption of a carbon-dioxide cap without a comparable commitment by China could drive the two nations’ trade balance out of control.
Continuing discussions between high-level teams from both countries are needed to discuss ways of overcoming the existing impasse in both countries. The leaders of the teams should be policy makers, above the level of the climate-change negotiators. These discussions should become formal. They need to be carried out on a regular schedule.
Discussions about a number of critical issues would most helpful in moving the dialogue forward. In addition to satisfying the U.S. and Chinese teams, the discussion should produce understandings that appeal to the international community engaged in climate-change negotiations. For the world community, the agreement must contain binding commitments in some form, and they must take effect in the near term. For China, if there are binding commitments, they must not threaten China’s growth and internal development goals, and they must include giving China access to knowledge, tools, and technology that lower the cost of reducing emissions. For the United States, the terms should not exacerbate the U.S. trade deficit with China.
What might an agreement that meets these conditions look like?
Levine: A formula that could work in China is a commitment that industrial emissions would grow slower than industrial value added – for example, 80 percent as fast – over the next decade, after which time a new formula could be agreed upon. The advantage of this approach is that it places no constraint on its consumer economy, which China views as necessary to meet its development objectives. A further advantage is that it addresses the sector that is responsible for 70 percent of all energy-related emissions; it thus addresses the activities in China that are by far the largest contributor to greenhouse gas emissions.
There are other formulas that could be used for China as well. Most involve adoption of an emissions target that increases as GDP increases, thus assuring China that growth need not be impacted so long as proper measures are taken to reduce growth of greenhouse gases.
What kind of assistance would China need to meet these goals?
Levine: There are two primary needs. In the short term – the next one to two decades – China’s primary need is technical assistance and knowledge transfer. This is often called capacity building.
As an example of capacity building, let me describe the China Energy Group’s work. Starting in the early 1990s we provided in-depth training to China in the design, analysis, and implementation of appliance energy-efficiency standards. We did this after receiving assurances that the Chinese government would promulgate standards if they gained the expertise to do so. As they promised, they issued efficiency standards for refrigerators eighteen months after the training began. This training continued for almost a decade, as the Chinese learned the many different techniques to assess energy efficiency in residential and commercial appliances and heating and cooling equipment.
Today, China has standards for twenty-two different household products. The government has created permanent institutions to develop and promulgate these standards and check compliance with them. The standards are expected to reduce CO2 emissions by more than 100 million metric tons by 2020. Valued at $20 per ton, this is $2 billion.
This demonstrates the tremendous leveraging that can result from modest investments in capacity-building projects. It is an example of how technical assistance can have a large impact on China’s CO2 emissions. The cost is a very small fraction of the benefits from emission reductions. The assistance develops the capacity for the Chinese to pursue energy efficiency but does not pay for it. Chinese consumers pay the higher cost of more efficient appliances; they also receive the direct economic benefits of lower energy bills.
The second need is for the longer term, where new low-carbon technologies will be essential if energy-related CO2 emissions are to be reduced to low levels. For the most part, such technology does not exist today, and the intellectual property for these technologies does not exist. There is a need for programs to support joint development of such technologies, using the technical and financial resources of many countries. It is also essential that new procedures be developed that permits the sharing of licenses and royalties from these technologies. There are substantial advantages to the United States and China working together, along with other nations, to carry out R&D on low-carbon technologies. If the governments of both countries support the research, they can establish the rules for the sharing of intellectual property.
Is there an equitable approach that ensures the United States does not suffer damage to its balance of payments with China as a result of an absolute cap on emissions?
Levine: There are different ways that this issue can be dealt with. I will describe one. For this purpose, I assume that the signatories to a climate change treaty will agree to a cap on emissions that establishes a price for carbon credits. This is the system that the European Union has adopted and that California and other U.S. states are developing.
The EU system with a cap that constrains emissions has resulted in the past in CO2 credits of about $20 or $30 per metric ton. To avoid impacts on trade, in a case where limits on Chinese emissions in early years would produce only small increases in the price of its products for export, China would agree to a tax on exports equal to the cost of a carbon credit (dollars per metric ton). To avoid this being too cumbersome, it would apply only to products that are energy- and therefore carbon-intensive in their manufacture. Under this proposal, China would collect the tax and would be required to apply it to its program of reducing CO2 emissions.
A program such as this would eliminate the trade advantage that China might gain by not having commitments as tight as industrial countries. It would have the further benefit of assuring resources in China that would be used to address greenhouse-gas emissions.
An international commission would be needed to oversee the uses of the tax in China – and presumably other developing countries, if the approach is extended to them – as well as the provision of resources from the United States and other industrialized countries to support greenhouse gas abatement in developing countries.
China and other developing countries will have the largest emissions in the future. If we allow them to have a cap that increases as their economies growth, how will it ever be possible to achieve acceptable levels of emissions?
Many people believe that China will continue increasing its energy demand and spewing CO2 into the environment forever, or at least for a very long time. This is, I believe, a fundamental misconception. China is in the middle stage of building its infrastructure – housing, commercial buildings, roads, hospitals, schools, and the like. It is at a relatively early stage of increasing the mobility of its population. Large quantities of energy are required to accomplish these tasks.
This period is likely to last for 15 to 20 years, possibly as long as 25, depending on whether China continues at its breakneck speed of construction and whether large numbers of rural dwellers continue migrating into urban areas. At the end of this construction period, China’s economy will be much like developed countries of today. Energy demand growth will decline markedly, just as it has in the industrialized world today.
One can envision a world in which China’s energy and CO2 emissions grow more than fourfold in 20 years, thus catching up with and overtaking large industrialized nations, except the United States and Canada, in per-capita emissions. One can also imagine a China in 20 years in which CO2 emissions have grown less than twofold, as a result of implementing advanced energy technologies and the furthering of policies to cut energy-demand growth.
If we succeed in working cooperatively with China to reduce CO2 emissions, the world stands a far greater chance of reducing the threat of global climate change. If we do not, it’s difficult to see how China will do it all alone. This is a choice that the two great nations who contribute by far the largest CO2 emissions to the atmosphere have to make.
Mark Levine has been a leader and senior author of major reports on energy efficiency and energy futures for DOE, the World Energy Council, the Agency for International Development, the Environmental Protection Agency, and the Energy Foundation’s China Sustainable Energy Program. A long-time contributor to the Intergovernmental Panel on Climate Change (IPCC), Levine was among the authors of three analyses, and convening or coordinating lead author of two of the three, that contributed to the IPCC’s winning a share in the 2007 Nobel Peace Prize. He is former director of Berkeley Lab’s Environmental Energy Technologies Division.